Rolls-Royce signals optimism on Brexit plans
Engine maker says it would prefer the UK to quit EU with a trade deal, but it has plans for a no-deal exit
London — UK engine maker Rolls-Royce has expressed confidence about plans for Britain’s departure from the EU, but said the pound’s Brexit-fuelled slump has left it in the red.
There is an increased chance of Britain crashing out of the EU in October with no trade deal in place under new Prime Minister Boris Johnson, meaning it would default to the World Trade Organisation (WTO) tariff system.
CEO Warren East told BBC radio on Tuesday that Rolls-Royce was well positioned because it already traded under WTO rules.
“We would obviously prefer a deal because that is probably the best chance of providing certainty for business, but we’ve always been prepared for contingency — prepared for a no-deal of some kind,” East said.
“We’re not a ‘just-in-time’ business like some other businesses, so we are actually in a much stronger position than others.
“As far as tariffs and the like are concerned, most of our business is in aerospace and WTO rules apply anyway.”
Rolls-Royce has spent £100m to prepare for Britain’s EU exit.
On Tuesday, Rolls also reported “good progress” on fixing problems with its troubled Trent 1000 plane engines.
However the group’s total net loss still hit £909m in the six months to June.
That compared with a broadly similar taxed loss of £954m a year earlier.
The 2019 performance was partly skewed by a hefty £763m charge on the tumbling value of the British pound.
Underlying operating profit jumped by a third to £203m, however, while revenue rose 5.3% to £7.9bn.
Rolls-Royce also took an extra £69m charge related to restructuring plans that include cutting 4,600 jobs by the end of 2020.
The company took an additional £59m hit from the decision by European plane maker Airbus to discontinue production of its double-decker A380 superjumbo. That takes the total related charge to £245m.
Rolls said that total costs linked to problems with its Trent 1000 engine used by the Boeing 787 Dreamliner stood at £1.6bn.
Some of the Trent 1000’s parts have worn faster than expected, forcing Rolls into expensive repairs.
“The total has now gone up from £1.5bn to £1.6bn, ut actually we’ve made good progress with new blades being fitted to engines and the fleet health is steadily improving,” East told the BBC.